Judge Orders State to Pay Castle Law’s Legal Tab

Castle Law Group has once again been vindicated in a court of law. This time, a Denver district judge has ordered the Colorado Attorney General’s office pay the group’s legal fees—fees that stem from Castle’s landmark win against the state earlier this year.

According to a District Court order handed down last week, the State of Colorado will need to pay a portion of Castle Law Group’s attorney fees and costs associated with State of Colorado v. The Castle Law Group.

The case, in which Attorney General Cynthia Coffman claimed the firm defrauded thousands of customers and homeowners during the housing crisis, spanned five years. District Judge Morris Hoffman ruled in Castle’s favor in April.

In his order handed down last week, Hoffman said the AG was “wrong to bring and pursue most of this case.”

“The evidence, or lack of evidence, at trial was nothing short of breathtaking, especially compared to the investigative build-up and the serious and pervasive allegations in the complaint, Hoffman wrote. “The case Plaintiffs put on wasn’t even a sick relative of the robust allegations they made. They didn’t call a single witness from any of the allegedly deceived industries. I recognize that reliance was not an element of Plaintiffs’ CCPA/CFDCPA claims. But how could they not call a single buyer when their central claim was that the price that buyer paid was deceptively above market?”

The order spans 20 pages and delves into much of the AG’s failures in handling the case. Despite these misgivings, Hoffman says he doesn’t think Coffman or other AG employees acted out of malice.

“Despite Plaintiffs’ exhaustive investigative efforts, despite the feeble trial they put on, and despite the minimal results they achieved, I do not believe that Plaintiffs acted in bad faith,” Hoffman wrote in his order. “These were gross errors of judgment, not vindictiveness. I don’t doubt that every one of the assistant attorneys general who participated in this case, and their governmental client-representatives, subjectively thought this was a righteous case; they probably still do.”

Larry Pozner, Partner at Reilly Pozner LLP and lead defense attorney in the case spoke to DS News exclusively about the case.

This case represents an unwarranted intrusion into the practice of law. It is up to law firms to serve their clients honestly and ethically but as the court pointed out there wasn’t a single institution that appeared in trial and said they were taken advantage of. Despite this, the state wiped out a prestigious and extraordinary law firm that employed 200 people. You can give back the all attorney’s fees in the world but you can’t replace the prestige and reputation of the law firm or its existence. I think sophisticated clients would be bothered by the complaint that was filed but as the judge pointed out the it’s easy to type the complaint it’s another thing to have the facts to back to it up. It was tragic that a tax supported law enforcement agency proceeded on five separate claims with no appropriate evidence, it was groundless and frivolous litigation.

The industry ought to pay attention to the consent decrees against other law firms. I think the AG consent decrees with other law firms improperly inhibits their ability to provide the quality of vendor services that sophisticated clients deserve and prefer.

It took the Castles to stand up and say we are not going to put up with this, we are going to fight back and tell our story. In the end it was the Attorney General who should be embarrassed about their conduct.

The exact amount the state will need to pay is yet to be determined—though it’s likely to reach into the millions. The total tally will be discussed at a hearing early next year.

Aly J. Yale is a longtime writer and editor from Texas. Her resume boasts positions with The Dallas Morning News, NBC, PBS, and various other regional and national publications. She has also worked with both the Five Star Institute and REO Red Book, as well as various other mortgage industry clients on content strategy, blogging, marketing, and more.